Mt. Gox Goes Offline in Wake of Massive Bitcoin Loss

A security breach at Mt. Gox, one of the primary bitcoin exchanges, has led the company to announce a halt on all transactions following massive losses – to the tune of 744,000 BTC, roughly $409,200,000.

Because Mt. Gox isn’t a bank, it’s unfortunate, but those affected really don’t have any recourse. A bank would be insured, but those who have lost their accounts are just left with exactly that – a loss.

The transaction closure was announced on the Mt. Gox site itself, and reads simply:

Dear MtGox Customers,

In light of recent news reports and the potential repercussions on MtGox’s operations and the market, a decision was taken to close all transactions for the time being in order to protect the site and our users. We will be closely monitoring the situation and will react accordingly.

Best regards,
MtGox Team

This is horrible news for those who had significant holdings in bitcoin, and a stark reminder that ANY type of financial exchange or institution requires extraordinary security. This is never more true than with new types of exchanges and currencies. It’s easy to fall into a trap of thinking that bitcoin isn’t real money, and doesn’t need the same level of security. It’s increasingly clear that that’s not the case.

Bitcoin seems to be dying. From this latest theft to the huge rift between bitcoin users and the general public in terms of understanding and using bitcoin, not to mention the difficulty for the average new bitcoin user of securing their wallets, it’s all just too much. I don’t see how this ever works out in the long term. And I’m holding some bitcoin, so I say this knowing full well what I stand to lose if I’m right.